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Production intermittence in sport markets

Author

Listed:
  • Augusto Ruperez Micola
  • Albert Banal-Estanol

    (LSF)

Abstract

This paper analyses the influence of production intermittence on spot markets. We use both game theory and an adaptation of the Camerer and Ho (1999) behavioural model. Controlling for costs, we find that intermittent technologies yield lower prices when incumbents have individual market power, but are higher when they do not have it. This happens both when firms are risk-neutral and risk-averse, and also under different intermittence and ownership configurations.Replacing high-cost assets with low-cost ones results in prices that are higher than when they are left to co-exist. The findings have implications for, among others, wholesale electricity markets, in which wind power is increasingly important.

Suggested Citation

  • Augusto Ruperez Micola & Albert Banal-Estanol, 2011. "Production intermittence in sport markets," LSF Research Working Paper Series 11-15, Luxembourg School of Finance, University of Luxembourg.
    • Handle: RePEc:crf:wpaper:11-15
    as

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    File URL: http://wwwen.uni.lu/content/download/53159/634728/file/Production%20intermittence%20in%20spot%20markets_2011%20(15).pdf
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